Reference:

• The Small Industries Development Bank of India (SIDBI) has released the "Understanding the Indian MSME Sector: Progress and Challenges" report. According to the report, despite comprehensive policy initiatives, MSMEs still face challenges in accessing adequate credit when needed.

Key Findings:

• Increase in Formalization: By March 2025, there has been a significant rise in Udyam Registration, growing from 2.5 crore to 6.2 crore registrations. However, 35% of micro enterprises are still not registered.
• Access to Credit: The survey highlighted that MSMEs consider lack of timely and adequate credit access as a major challenge. 12% of micro enterprises still borrow from informal sources, whereas the percentage is lower for small and medium enterprises.
• Digital Lending and Payments: 18% of MSMEs use digital lending platforms, and 90% accept digital payments, signaling positive trends for credit access and financial inclusion.
• Credit Gap: There is an estimated credit gap of around 24% or ₹30 lakh crore in the MSME sector, with the gap being 27% in the services sector and 35% higher for women-owned MSMEs.
• Women Entrepreneurship: 26.2% of MSMEs are owned by women. Among these, 76% have access to credit, but they face higher challenges, such as competition and credit access barriers.
• Market Access: Approximately 70% of MSMEs still rely on traditional marketing methods, which hinder their scalability and competitiveness. Effective use of e-commerce and digital marketing can offer improvements.
• Export Potential: MSMEs increased their export share from 43.6% in FY23 to 45.7% in FY24. However, challenges such as supply chain issues, credit access, and competition continue to persist.
• Skilled Labor Shortage: Around 25% of MSMEs cited a shortage of skilled labor as a major challenge, especially in sectors like defense equipment, ready-made garments, hotels, tiles, and sanitary ware.
• Infrastructure and Technology Gaps: Inadequate infrastructure and lack of technology adoption affect productivity and competitiveness, particularly in sectors like auto components, iron and steel, and transport & logistics.
• Sustainability Efforts: More than one-third of MSMEs have adopted sustainable practices, with 31% using energy-efficient systems and 21% utilizing renewable energy. However, 33% cited a lack of awareness as a barrier to further adoption.